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Consumptions taxes hit poorer people much harder than rich people. A top rate of 43% isn't that high. The top rate in the UK is higher. Granted it kicks in h

Consumptions taxes hit poorer people much harder than rich people. A top rate of 43% isn't that high. The top rate in the UK is higher. Granted it kicks in higher but it's still set at 45%.

ptaipale 11y ago
That's not the top rate. The top rate is a bit over 60 % of gross amount. 43 % is the proportion of tax revenue paid by the top decile. (10 % of taxpayers pays 43 % of revenue.)
charlesdm 11y ago
The difference being that you don't pay income tax when you sell a business, you pay capital gains. Those are usually taxed at a significant lower rate (or not at all, depending on the country) For wealthy people, income tax doesn't matter as much as capital gains
- ptaipale 11y ago
  Exactly. Competition keeps capital gains taxes reasonable, but that doesn't apply to earned income tax. CGT is a mildly progressive 30-33 % here. If the government were trying to get 60 % which is my marginal tax rate for earned income, their revenue would likely plummet because there would not be much sense in showing capital gains in this country. Anyone selling a business etc would move to that great tax haven, Sweden, for the year when they sell. For us workers, the best tax planning option is to switch earnings to non-taxable form like working for ourselves. E.g. if I want to have a new garden shed, I don't pay someone to build it. I take unpaid leave from work and build it myself. This way, the tax office pays most of my garden shed. This country has probably the most expensive carpenters you can think of...
  - charlesdm 11y ago
    Indeed. Income earners usually can't escape the income tax. Capitalists very easily can. Or they at least can defer it indefinitely and live off of investment gains (for example, by using holding and investment vehicles) At the end of the day, it's simple math. Live in country X, pay 33% when sold. Live in country Y, pay 15% when sold. Live in country Z, pay nothing. When we're talking about millions in tax, Monaco/Belgium/Malta/the UK do become very attractive very fast. After all, you can always return a few years later and live like a king.

Consumptions taxes hit poorer people much harder than rich people. A top rate of 43% isn't that high. The top rate in the UK is higher. Granted it kicks in higher but it's still set at 45%.

ptaipale 11y ago

That's not the top rate. The top rate is a bit over 60 % of gross amount. 43 % is the proportion of tax revenue paid by the top decile. (10 % of taxpayers pays 43 % of revenue.)

charlesdm 11y ago

The difference being that you don't pay income tax when you sell a business, you pay capital gains. Those are usually taxed at a significant lower rate (or not at all, depending on the country) For wealthy people, income tax doesn't matter as much as capital gains

ptaipale 11y ago
Exactly. Competition keeps capital gains taxes reasonable, but that doesn't apply to earned income tax. CGT is a mildly progressive 30-33 % here. If the government were trying to get 60 % which is my marginal tax rate for earned income, their revenue would likely plummet because there would not be much sense in showing capital gains in this country. Anyone selling a business etc would move to that great tax haven, Sweden, for the year when they sell. For us workers, the best tax planning option is to switch earnings to non-taxable form like working for ourselves. E.g. if I want to have a new garden shed, I don't pay someone to build it. I take unpaid leave from work and build it myself. This way, the tax office pays most of my garden shed. This country has probably the most expensive carpenters you can think of...
- charlesdm 11y ago
  Indeed. Income earners usually can't escape the income tax. Capitalists very easily can. Or they at least can defer it indefinitely and live off of investment gains (for example, by using holding and investment vehicles) At the end of the day, it's simple math. Live in country X, pay 33% when sold. Live in country Y, pay 15% when sold. Live in country Z, pay nothing. When we're talking about millions in tax, Monaco/Belgium/Malta/the UK do become very attractive very fast. After all, you can always return a few years later and live like a king.